OVERVIEW
The balance of payments provide a systematic record of economic transactions between residents of Australia and residents of the rest of the world. The balance of payments are compiled from a range of ABS and other agency surveys, administrative data and special data sets.

PURPOSE
To provide statistics and related information on Australia's balance of payments and international economic transactions to assist:

economic analysts and policy advisers to monitor, evaluate and forecast developments in Australia's external sector accounts for purposes of domestic and international macro-economic analysis and policy determination; and

governments, government agencies, businesses, industry associations, research institutions and other users to analyse particular types of transactions and financial claims between Australian residents and non-residents, for purposes such as trade promotion and negotiations, market and industry performance studies, etc.

SCOPE
Scope and coverage include all Australian resident units engaged in transactions with non-residents as defined by the "System of National Accounts" (1993) and the "Balance of Payments Manual" (fifth edition, 1993).

DATA DETAIL

Conceptual framework
The conceptual framework used in Australia's Balance of Payment is the framework provided by the International Monetary Fund's "Balance of Payments Manual" (fifth edition, 1993) . The ABS publication "Balance of Payments and International Investment Position, Australia (Catalogue Number 5331.0)" describes the conceptual framework of Australia's balance of payments statistics and the data sources and methods used to compile them.

The Australian balance of payments is a statistical statement designed to provide a systematic record of Australia's economic transactions with the rest of the world. It may be described as a system of consolidated accounts in which the accounting entity is the Australian economy and the entries mostly refer to economic transactions between residents of Australia and residents of the rest of the world (non-residents).

Until the June quarter 1997 reference period, these statistics were compiled in accordance with the Fourth Edition of the International Monetary Fund's Balance of Payments Manual (BPM4). From the September quarter 1997 reference period, these data are compiled by the ABS in accordance with the Fifth Edition of that manual (BPM5) which was published in 1993.

Adoption of the BPM5 standards for all issues from the September quarter 1997 onwards saw changes to the basis of compilation to more fully reflect the requirements of the new standards. For more information about the nature of the changes made to introduce the new IMF standard see the ABS Information Paper: Implementing New International Statistical Standards in ABS International Accounts Statistics (5364.0). For an assessment of the impact of the changes see the ABS Information Paper: Upgraded Balance of Payments and International Investment Position Statistics (5365.0).

The balance of payments accounts, which present systematically the economic transactions between Australia and the rest of the world, incorporate four types of economic transactions. The first involves the provision of real resources, i.e. transactions in goods, services and income. The second involves the provision of financial resources, i.e. foreign financial assets and liabilities. The third covers those one sided transactions of a current nature (described as current transfers) that are offsets to transactions in current real or financial resources that are undertaken without an exchange. For example, famine relief, whether in cash or in kind, would have its offset in current transfers. The fourth type is capital transfers that offset transactions which are undertaken, without exchange, in fixed assets or in their financing (such as development aid). For example, migrants' funds represent the shift of the migrants' net worth to or from Australia, and are classified as capital transfers.

The first and third of these types of transactions comprise the current account, while the second type comprises the financial account. The fourth type (capital transfers), together with a minor item for the acquisition and disposal of non-produced, non-financial assets (such as patents), comprises the capital account.

The double entry accounting system is used for recording balance of payments transactions. Under this system, credit entries, which are shown with no arithmetic sign, are used to record the provision of real or financial resources. The credit entries are therefore required for exports of goods and services, and for income earned by residents (a return for providing the use of financial capital to non-residents, or for providing the labour of Australian residents). Credit entries are also required for providing financial resources to the rest of the world, either as new liabilities (such as issuing bonds), or through returning existing assets (such as selling foreign equity securities to non-residents). Therefore, any credit entry in the financial account will reflect either an increase in Australia's foreign liabilities (more foreign debt or foreign ownership), or a decrease in Australia's foreign financial assets (such as a rundown in foreign exchange reserves).

Conversely, debit entries, which are identified by a minus sign (-), are used to record the provision by the rest of the world of real or financial resources to Australia, and are shown against imports of goods and services, income earned from Australia by non-residents, and financial transactions involving either an increase in foreign financial assets or a decrease in foreign liabilities.

Transactions in a double entry accounting system are reflected in pairs of equal credit and debit entries. For example, an export transaction for which payment is received through the banking system involves a credit entry for providing the good to a non-resident and a debit entry for being provided with foreign exchange assets due as payment for the export. Any entries that are not automatically paired in a transaction, i.e. for which there is no 'quid pro quo', are matched by special offsetting entries. Such offsetting entries are made in the categories 'current transfers' (when offsetting the provision of current resources such as food for famine relief) and 'capital transfers' (when offsetting the provision of capital resources such as development aid to build a new dam).

In principle, the net sum of all credit and debit entries is zero. In practice, some transactions are not measured accurately (errors), while others are not measured at all (omissions). Equality between the sums of the credit and debit entries is then brought about by the inclusion of a 'net errors and omissions' item which balances the accounts.

Transactions and other changes should be valued in the balance of payments at market prices. However, for practical reasons, transactions are generally valued in the statistics at transaction prices as this basis provides the closest practical approximation to the market price principle.

Transactions and other changes recorded in the balance of payments should be recorded at the time of change of ownership (either actual or imputed). For current account transactions, this occurs when ownership of goods changes, or services are provided. Investment income is recorded on a full accrual basis, that is, when it is earned. Reinvested earnings are calculated for the earnings of the period of account, using current replacement cost estimates of depreciation and excluding holding gains and losses. Current and capital transfers should be recorded when the goods, services, cash, etc., to which they are offsets, change ownership. Those transfers, such as taxes and fines, which are imposed by one party on another, should ideally be recorded at the time of the occurrence of the underlying transactions or other flows or events that give rise to the liability to pay. For the financial account transactions, the time of recording is at the change of ownership of the financial claims, which by convention is the time at which transactions are entered in the books of the transactors.

In practice, the nature of the available data sources is such that the time of recording of transactions will often differ from the time of change of ownership. Where practical, timing adjustments are made for transactions in certain goods to ensure that they are recorded in the time period in which change of ownership occurs.

Classifications
The classifications for the presentation of Australia's balance of payments are shown in the various international standards adopted for their compilation, including the IMFs BPM5 and the OECD-Eurostat Classification of Trade in Services. For details of their application in the Australian context see 5364.0 and 5365.0. For details of the commodity details used to extend the standard general merchandise classification see 1361.0.

The concepts and classifications are also shown in Balance of Payments and International Investment Position, Australia (Cat no. 5331.0) - Concepts Sources and Methods 1998 edition
- Chapter 3.

Other concepts (summary)

GEOGRAPHIC DETAIL
Australia

Comments and/or Other Regions
For many years Australia has published its balance of payments statistics not only on a global basis but also on selected country and regional bases (classification by country partner). Such statements are published annually in accordance with international guidelines.

COLLECTION FREQUENCY
Quarterly

Frequency comments
A monthly subset of data on international trade in goods and services is published, and annually some extra detail is also released.

COLLECTION HISTORY
Annual estimates were first published in 1931. Annual data are currently available from 1945-46. Quarterly balance of payments estimates were first published in January 1964. These data are available from the September quarter 1959. Seasonally adjusted estimates were published for the first time in Australia with the September quarter 1974 issue. Monthly international trade in goods and services data are available from July 1971.

DATA AVAILABILITY
Yes

Data availability comments
See under Main Outputs.
Data is also available on Ausstats.

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